"Auto-Everything" Seen as Key Feature Affecting Retirement Marketplace over Next Three Years
BOSTON, MA, July 30, 2007 -- A study of advisors whose business is largely focused on the retirement marketplace reveals that auto-enrollment - allowing employers to automatically enroll workers in the retirement plan and requiring participants to specifically opt out if they prefer not to participate, and auto-escalation - allowing employees to automatically increase their annual plan contributions, are the two principal features most likely to shape the retirement marketplace over the next three years.
The poll, prepared in conjunction with Putnam's annual 401k Golden Scale meeting, also found that while 75% of the advisors' plan sponsor clients will add an auto-enrollment feature within the next two years, two of every five sponsors are resisting its use over concerns about added matching contribution and profit sharing costs driven by an anticipated uptick in enrollment.
"Our 401k advisors strongly agree that auto features will be one of the dominant drivers of increased retirement savings, but the hurdle of perceived added program costs means that many plan sponsors will not provide these features to their employees," said David Tyrie, Managing Director, Director of Retirement Services, Putnam Investments. "What's clear, too, from our poll is that the role of the advisor is critically important long after the plan has been implemented, since plan sponsors continue to be reliant on their advisors for assistance and insight related to numerous operational and administrative plan issues."
Other key findings include:
- Advisors are recommending an array of default options: 80% of advisors recommend target-date funds; 65% target risk funds; 63% favor balanced mutual funds. Only 13% are waiting for final Department of Labor guidance.
- Open architecture within bundled plans is a critical must-have
- Fifty percent of advisors serve as fiduciaries to the plans they manage
- Sixty percent of advisors say their clients have sufficient information related to plan fees, but they still rely on advisors for help
- The Pension Protection Act and growth of the Defined Contribution marketplace is viewed as a business expansion opportunity by advisors
Mr. Tyrie noted that the Pension Protection Act and growing complexity of 401k plans means sponsors are increasingly turning to their advisors to interpret retirement plan legislation and the new default options recommended by the Department of Labor.
Methodology
Putnam Investments surveyed 525 advisors online, to evaluate trends, expectations, and outlooks on key issues facing advisors who work primarily in the retirement area. The survey was conducted over a three-week period during May and June 2007. Eighty-two advisors (15.6%) responded, most of whom are doing or had done business with Putnam. The survey was prepared in conjunction with Putnam's annual 401k Golden Scale meeting, where many of the industry's top advisors convene to discuss industry trends, updates, and developments in Putnam's investment and retirement products.
About Putnam Investments
Founded in 1937, Putnam Investments is one of the nation's oldest and largest money management firms. As of June 30, 2007, Putnam managed $193 billion in mutual fund and institutional assets. Mutual fund assets were $121 billion. Institutional assets were $72 billion. Putnam has offices in Boston, London, and Tokyo. For more information, go to www.putnam.com.
###
Click here for more material dealing with current trends, opinion, news, legislative action, investments, marketing, sales, consulting, and legal issues on 401k plans.
This is a press release provided by the company or its representatives. 401khelpcenter.com, LLC is not the author of this release and is not associated or affiliated with any firm or organization mentioned unless otherwise noted. Use of any information obtained from this release is voluntary, and reliance on it should only be undertaken after an independent review of its accuracy, completeness, efficacy, and timeliness. Reference to any specific commercial product, process, or service by trade name, trademark, service mark, manufacturer, or otherwise does not constitute or imply endorsement, recommendation, or favoring by 401khelpcenter.com, LLC.
